China Eximbank provides $90.2 million buyer’s credit loan for Kamburu-Embu-Kibirigwi-Thika Transmission Line Project

On August 1, 2017, China Eximbank and the Government of Kenya signed a $90,286,383.39 buyer’s credit loan (BCL) agreement for the Kamburu-Embu-Kibirigwi-Thika Transmission Line Project. The loan carries a maturity of 17 years (final maturity date: July 21, 2034). The other borrowing terms of the BCL are unknown. However, it is known that the proceeds of the BCL were on-lent to a Kenyan state-owned electricity company called the Kenya Electricity Transmission Company Limited (KETRACO). The ultimate borrower, KETRACO, used the proceeds of the BCL to finance approximately 85% of the total cost of a $118 million commercial contract between a consortium consisting of China North Industrial Corporation (NORINCO, 中国北方工业有限公司) and Shandong Taikai Power Engineering Co. (TKPE, 山东泰开电力建设工程有限公司) and Kenya's Ministry of Energy and Petroleum, which was signed on January 29, 2016 and amended on May 26, 2017, October 18, 2019, and April 30, 2020. No BCL (loan) disbursements or principal repayments took place between July 1, 2020 and June 30, 2022 (Fiscal Year 2020-2021 and 2021-2022). The loan’s amount outstanding was zero as of June 30, 2021 and zero as of June 30, 2022. The purpose of the project is to construct (1) a 153 km, 220kV transmission line from Kamburu to Kibirigwi (via Thika and Embu) with bay extension at the Kamburu substation, (2) a 3 km 132 kV transmission line and three 150MVA 220/132kV substations at Embu, Kibirigwi and Thika, and (3) a 132kV LILO substation at Kibirigwi on the Masinga/Kutus transmission line. NORINCO and TKPE are the EPC contractors responsible for project implementation. An Environmental and Social Impact Assessment (ESIA) was carried out for the project in June 2009. Then, a November 2018 Sector Report from the Government of Kenya's Treasury Department identified the project as having cumulative expenditures of KES 2.651 billion as of June 30, 2018; it also identified the project as having achieved a 1% completion rate, with a status designation of ‘need[s] budget provision.’ However, by 2021, the project had achieved a 50% completion rate. Its originally scheduled completion date is December 2022.

Additional details

1.This project is also known as the Kamburu-Embu-Kibirigwi-Thika & Uplands Transmission Line Project, the Kamburu Embu Thika Project, the 148 km Kamburu-Embu-Thika Transmission Line and Associated Substations Project, the Kamburu- Embu - Kibirigwi - Thika - 220KV Transmission Line and Associated 220-132KV Substation Works and 132/66KV Substations Project, and the 220kV Kamburu-Embu-Kibirigwi-Thika Project. The Chinese project title is Kamburu-Thika 132/220kV电力线路传输及变电站工程建设项目. 2. Some sources suggest KETRACO was the original borrower and others claim it is the Government of Kenya. The Kenya Electronic Project Management Information System (e-ProMIS) identifies July 14, 2016 rather than August 1, 2017 as the loan commitment date. These issues warrants further investigation. 3. According to page 56 of the KETRACO 2019-2020 Annual Report, an RMB-denominated loan related to the construction of the Kamburu-Meru transmission line (Thika, Embu, and Kibirigwi are between Kamburu and Meru) was transferred from Kenya Power and Lighting Company (KPLC) to Kenya Electricity Transmission Company (KETRACO), on October 19, 2016. According to the novation agreement, KETRACO is required to make bi-annual payments to the Government of Kenya (GoK). However, as at 30 June, 2020, KETRACO had not made any payments to GoK, as stipulated in the novation agreement. Management has indicated that a moratorium for twenty-four (24) months had been sought from The National Treasury. However, this request for moratorium was yet to be considered by the National Treasury. It is unclear which loan this is referring to. 4. The KETRACO project identification number is KET/2/9/4/122. e-ProMIS identifies the total project cost as USD 134.4 million. 5. This China Eximbank loan is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. Nor is it included in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020. 6. The Government of Kenya loan identification number is 2017037_1. 7. The amounts outstanding, disbursements, and repayments data are drawn from the Kenyan Treasury’s External Public Debt Register. See https://www.dropbox.com/s/549ixt2gj1jbjvi/External-Public-Debt-Register-as-at-End-June-2022.pdf?dl=0 and https://www.dropbox.com/s/0et4jg1qfg1bo7r/External-Public-Debt-Register-as-at-End-June-2021.pdf?dl=0 and https://www.dropbox.com/s/233j706743q7f1g/External-Public-Debt-Register-as-at-End-June-2020.pdf?dl=0 and https://www.dropbox.com/s/qkoybr9ja0ohemy/External-Public-Debt-Register-as-at-End-June-2009.pdf?dl=0 and https://www.dropbox.com/s/thy3s6ggjcjd97z/External-Public-Debt-Register-as-at-End-June-2012.pdf?dl=0 and https://www.dropbox.com/s/fzbfq01vas6m0i9/External-Public-Debt-Register-as-at-End-June-2019.pdf?dl=0 and https://www.dropbox.com/s/ennrl6d4zd2nizs/External-Public-Debt-Register-as-at-End-June-2018.pdf?dl=0 and https://www.dropbox.com/s/8ibazrj1a8oho2d/External-Public-Debt-Register-as-at-End-June-2017.pdf?dl=0 and https://www.dropbox.com/s/wdbjl0wq49i09x1/External-Public-Debt-Register-as-at-End-June-2015.pdf?dl=0

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